2 Primary Types of Bad Faith in Insurance Claims

injured woman reading insurance claims documentAs if suffering from property damage or injury isn’t enough, you have an insurance company that jumps ship when it is time for their end of the deal. Ideally, they would investigate, negotiate, and then settle all claims in good faith. However, in some cases, these companies violate their duty.

In such a case, you can have a bad faith attorney here in Los Angeles help you to sue the insurance firm. In general, bad faith is unfair and dishonest. You, with the help of a lawyer, have to prove that the company applied dishonest tactics to wiggle out of their responsibility.

An insurance company can act in bad faith in the following ways.

First-party bad faith

If an insurer does not process a claim adequately, the firm could be liable for first-party bad faith. Processing a claim sufficiently means the insurer needs to verify the loss or accident and investigate the claim. From then, they determine the limits of the coverage, as well as how much the loss amounts to.

After that, they can deny or pay the claim. If you do not accomplish one of the steps properly, then it is ground for a bad claim suit. First-party bad faith may also happen when the insurer delays their payment for a legitimate claim or denies a claim unreasonably.

Third-party bad faith

It constitutes third-party bad faith is an insurer fails to settle a claim. Courts have imposed a duty on insurers to account for the interests of the insured when they are discussing settlements. The insured should also be made aware of any settlement demands. Otherwise, it constitutes bad faith.

You can also consider it third-party bad faith if the insurer denies the insured a defense in cases provided in the policy, or if the defense was provided but the legal counsel was negligent.

An insurance firm sued for bad faith can raise a number of defenses. Besides, some states also provide them with a way to protect themselves. As such, it is always wise to tackle a bad faith claim with the help of a trained professional.